Feed prices creep downward

Although the latest USDA report has confirmed the tightness of supply for soya beans, corn and wheat, there has still been some positive news for livestock farmers in recent weeks.

At the time of writing, old-crop rapeseed prices had fallen back due to a lack of demand, trading at close to summer forward prices of about £185/t. As a result, the premium for spot prices has dropped from £30/t back in January to about £5/t.

Maize gluten and distillers’ feeds have also dropped by £6-8/t, whilst soya hulls have dipped further to about £157/t delivered. Liquid feeds continue to be one of the best buys for energy, and supplies of some moist feeds are at last improving. New availability of processed bread from May onwards at £130-133/t will provide a great value starch alternative compared to wheat at more than £200/t.

And there’s been increased interest in moist concentrate mixes as products such as brewers’ grains become available once again. Consider mixing with soya hulls and bread to create an 18% crude protein moist concentrate that’s up to 23% cheaper than a dry compound.

Turnout will also be starting to ease pressure on feed stocks. Not only is less feed needed if herds can make good use of grazing, but the high levels of rumen degradable protein (RDP) in spring grass mean significant cost savings can be made by switching from traditional proteins like rapeseed meal and soya bean meal (which contain relatively high levels of RDP) to dedicated rumen-bypass proteins. These feeds can provide the necessary digestible undegraded protein (DUP) to support high milk yields much more cost-effectively.

For some, there has been slightly better news in terms of milk prices, so while feed demand in the UK is reported to be down as a result of current feed costs, more producers should now be looking to invest in feeding this summer to maximise income from extra marginal litres.

Expect demand to creep back as summer progresses and milk price increases begin to have an effect, and look to take advantage of any dips in feed markets as they arise.

There have also been rumours that China may not be importing quite as much soya bean meal as previously expected, although it’s a rumour that remains unsubstantiated at this time. Holding off on feed purchases in the hope that prices fall due to this reduction in demand is a high risk strategy, particularly in light of recent confirmation that the fundamentals of global supply and demand remain finely balanced.

It means that in addition to focusing on remaining summer feed requirements, farmers should also now be thinking about feed supplies for next winter. Soya bean meal, for example, is currently trading at a good discount for the winter, with prices in the high £280s/t worth securing for maybe 20-40% of what’s needed – if you need ten loads of protein through the winter, get two to three loads covered now.

The same is true for wheat, with forward contracts for November delivery currently about £170/t, compared to a May forward contract price of £213/t delivered, and growing concern over the need to import wheat to meet demand in August before new crop is available. Any disruption to wheat harvests around the world could quickly send winter prices back over £200/t, whilst the potential for prices to drop below £150/t for any length of time appears limited.

However, alternative feeds like maize meal and processed bread remain a better buy than cereals in most cases. For digestible fibre to feed alongside lush spring grass, some imported sugar beet feed is available, though soya hulls are better value, and distillers’ feeds contain a useful combination of both protein and high levels of digestible fibre energy.

Overall, the general feed buying advice remains the same, with no major downturn expected long term. So watch for dips in the market, be ready to respond quickly when opportunities do arise, and any discount of more than £5-10/t should be seen as well worth considering given the potential for prices to rise further.

Finally, palm production in Malaysia continues to be stronger than expected. This has caused the price of palm fatty acid distillate (PFAD) – a major ingredient in many rumen-protected fats – to fall back to levels last seen in October 2010, with a reduction in protected fat prices likely to be welcome news for many this spring.

Information supplied by KW Alternative Feeds, supplier of a range of feeds for UK farmers. Further information here.